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The long dream of a national portrait gallery to showcase Canada's famous faces is dead.BLAIR GABLE

After years of halted attempts to find a permanent home, the Portrait Gallery of Canada is a gallery no more, shuffled Wednesday into the programs branch of Canada's national archives.

The move is part of a larger shakeup at Library and Archives Canada, the portrait gallery's parent institution, which will see the gallery lose its name - as well as the person who has shaped it for the past eight years.

Director general Lilly Koltun has been let go and, in an e-mail obtained by The Globe and Mail, she told her staff she is leaving because of a modernization process launched by the new Librarian and Archivist of Canada, Daniel J. Caron. She will take on a temporary project as the senior adviser, documentary art initiatives until March, after which she expects "to search for a new position."

Dr. Koltun's e-mail also says the portrait gallery will cease to have the word "gallery" in its name, merging with the programs branch of Library and Archives as a "portrait program."

Its dedicated budget and staff will remain constant, and it can still mount travelling exhibitions, said Marie-Josée Martel, acting assistant deputy minister for Library and Archives. It will now be led by Donna Sianchuk, director general of the programs branch.

Ten senior managers at Library and Archives are being shuffled to new internal jobs as part of a "modernization exercise," Ms. Martel said.

Michel Grenier, director general of human resources and organizational innovation, said the moves are in line with a general "executive talent management initiative" and Treasury Board recommendations.

Dr. Koltun, who took over the portrait gallery in 2001 after working at the National Archives of Canada since 1976, will also write a book for Library and Archives. In a telephone interview Wednesday, she said "the LAC offered different opportunities to me" after Mr. Caron made his decision.

The gallery had been operating for some time under the auspices of Library and Archives, and Ms. Martel said its new status as a program does not affect its chances of one day landing in a permanent exhibition space.

But NDP MP Paul Dewar thinks the move is a demotion for the portrait collection and marks another blow to its hopes of one day finding a permanent home.

"This isn't just about moving people around flow charts and having numbers on paper. Make no mistake, this is because of the Conservative government asking for savings," Mr. Dewar said just hours after giving a speech about the gallery to a group of curious senior citizens.

"To say that this will have no impact is really an insult to people who want to see our culture put on display."

Ambitious plans to build a permanent portrait gallery facing Parliament Hill on the site of the former U.S. Embassy were hatched nearly a decade ago. But with renovations under way and with the total cost swelling to $40-million, the Harper government pulled the plug on the plan in September 2007.

The Tories briefly considered putting a portrait gallery in Calgary, then unveiled an unorthodox and controversial bidding process by which developers from nine Canadian cities were invited to submit bids to build the gallery and then lease or sell it to the federal government. That plan was also scrapped last November.

"Given that we've created the first national museum outside of Ottawa - the Canadian Museum of Human Rights - and the fact that we're also creating a national museum at Pier 21 in Halifax, I don't think Mr. Dewar's comments are accurately reflecting our government's approach to the arts and culture file," said Deirdra McCracken, director of communications for Canadian Heritage Minister James Moore.

The portrait gallery boasts a collection of more than 20,000 paintings, drawings and prints, four million photographs and thousands of caricatures. But it is also known for its variety and its populism, featuring images both of and by average Canadians as well as the requisite major figures.

Mr. Caron took over as the country's Librarian and Archivist in late April. A career public servant with considerable experience in record-keeping and knowledge management, but little formal training as an archivist, he was considered by some an unorthodox choice, but also one who could bring new energy to the job.

On Wednesday, he posted a lengthy public statement about the modernization process online, saying the challenge to stay relevant in a digital age "is colossal" and that "we should take this opportunity to rethink our approaches, where necessary."

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